India's fiscal deficit is expected to be at around 5 percent of gross domestic product, lower than the downward revised estimate of 5.2 percent for the 2012/13 fiscal year that ended in March, two government sources said on Thursday.

The government has cut its expenditure by a further 200 billion rupees ($3.67 billion) in March which has helped in cutting the fiscal deficit, the officials said, adding the government has started the new fiscal year with a cash balance of one trillion rupees.

Also, indirect tax collection has been higher-than-expected, offsetting a shortfall in direct tax recepits in 2012/13, they added.